May 31, 2004 (07:05 AM EDT)
Read the Original Article at InformationWeek
For many companies, future growth requires adopting a singular, global view of nearly every aspect of the business: the workforce, supply chain, operations, and sales. That means a global approach to business technology, whether it's supporting a network infrastructure spanning dozens of countries or coaching development teams from Brussels to Bangalore. Here's how five U.S. companies are meeting the challenge.
Gen. George Patton made the point that even a great strategist can't win a war unless he keeps his lines of communication clear. Whether you're fanning out an army across Europe or expanding a business around the world, Patton's insight holds true.
One of the most persistent technological challenges of global business is getting communications networks to expand in lockstep with business. Cost and complexity increase as a company's network spreads across the world, while employees increasingly rely on that network as their lifeline to the business.
With some 500 locations in more than 30 countries, Johnson Controls Inc. knows the challenge well, having increased its Internet bandwidth 50% in the last year. "I've been here 3-1/2 years, and the expansion has been very aggressive," says Mark Schoeppel, VP of global IT Infrastructure for the automotive-industry supplier.
Johnson Controls isn't a risk taker when it comes to business technology. "I wouldn't say we're a bleeding-edge company," Schoeppel says. The company was born about 120 years ago, when Warren Johnson, a professor at the State Normal School in Whitewater, Wis., invented the electric room thermostat. His business, called Johnson Electric Service Co., became a leader in temperature control. The company diversified over the years, changed its name to Johnson Controls, and expanded into automotive components in the 1980s, becoming the world's largest manufacturer of car seats. It's now a worldwide leader in both automotive systems and environmental controls, with revenue topping $22.6 billion last year. Johnson Controls has 118,000 employees worldwide and factories on five continents.
The company connects its offices with a frame relay WAN, which it buys as a managed service through MCI. While the pipe has proven reliable, in recent years, increasing bandwidth demands have put a strain on it. In the past, overseas facilities had no connectivity to other regions and ran their manufacturing applications locally on small Unix servers. But when the company began connecting those offices through VPNs and sharing applications globally, demand surged.
This affected application performance, yet Johnson Controls had no way of determining which applications were gobbling up the most bandwidth. In the meantime, the company began centralizing, moving away from its practice of running multiple versions of critical applications, with different offices and regions having their own deployments. Now users around the world connect to an office in Milwaukee to run PeopleSoft Inc. apps for human resources, benefits, and payroll, or to Germany to run SAP financials.
To solve its bandwidth problems, last summer, Johnson Controls started using nGenius Performance Management from NetScout Systems Inc., a device that's controlled by Web-based software. The system shows how programs behave, identifies network bottlenecks, and helps the IT staff determine where it can prioritize and optimize traffic. The system has helped identify potential problems before they occur, preventing downtime and data loss, and has paid for itself by reducing the amount of time spent on the network, Schoeppel says.
To increase bandwidth capacity, Johnson Controls added new frame relay pipes and VPN-tunneling services. In the coming year, Schoeppel says, the company will spend significant time and resources on the deployment of new Multiprotocol Label Switching-based connections. Services based on that standard connect sites in a redundant web of links, offering more resilient communications than point-to-point frame relay architectures. Those connections should make it possible for Johnson Controls to eventually achieve its cost-saving goal of converging voice and data on one network.
There are plenty of other businesses facing global network challenges. Schoeppel's advice? "The biggest mistake you can make is assuming that you're going to have the same kinds of problems as here in the U.S.," he says. "You have to personally go out to these regions, spend time there, find out what the challenges are. There just is no substitute for having your own feet on the street and your own eyes on the problem."
--David M. Ewalt
The clearest evidence that globalization is at the center of Manpower Inc.'s IT strategy isn't the flags of 30 countries at the entrance to its corporate headquarters in suburban Milwaukee. It's on the whiteboards around global CIO Rick Davidson's office, where one morning, dozens of elementary French expressions are penned in red dry-erase marker.
Qu'est-ce que c'est?
"As global CIO, I have to drop my U.S.-centric thinking and ask, 'How do I provision IT globally, and what's the best way to do that?'" says Davidson, who's studying French and already speaks Spanish. "One person's offshore is another person's onshore."
Since late last year, Davidson has led the staffing company's internal IT department in a process for global IT management it calls the Manpower Way. Manpower has about 580 IT staff around the country, including large development teams in Brussels, Belgium; Milwaukee; Paris; Sydney, Australia; and Tokyo. Manpower Way is an effort to get all those offices working the same way--the same project-management standards, financial measurements, time-reporting systems, and--where possible--the same technologies.
Manpower's goal is to create a more-efficient IT organization, so developers share their work and avoid duplicating efforts. For example, the Brussels development team is developing software that offices will use to take orders for temporary staffing from customers. Country-specific IT teams will be able to fine-tune it to their needs, but they must follow Manpower Way's rules, such as using IBM WebSphere to build extensions.
Creating one global IT department and architecture is a focus for many companies. Under CIO Randy Mott, Dell has added to its core strategies a "build anywhere, not everywhere" application-development philosophy. Dell's goal is that, once an application is written and stabilized in the test-pilot country, it will be deployed within six months in every country where Dell does business.
Davidson considers measuring productivity critical for global IT management. Manpower records how IT people spend their time, from developing applications to taking vacations. That lets IT leaders decide where around the world teams are most effective and where they need improvement. It also provides insight into what functions can be performed in low-wage countries. In assessing the real cost of outsourcing, Davidson warns that not having a true understanding of internal teams' productivity can prompt a manager to confuse low offshore wages with lower total costs. Without the data, "you'll do a qualitative look and say, 'Well, it looks like it might be a bit financially beneficial to go offshore,'" he says.
Manpower employs about 150 developers worldwide working on new projects and contracts for about 10 to 12 programmers in India. The company will probably begin using more contractors, since Davidson believes 15% to 20% of IT staff should be contingent, given the up-and-down project nature of the work.
Another part of Manpower's global strategy is to consolidate systems. Before Davidson joined Manpower as global CIO, all IT was local. That meant Manpower wasn't leveraging its buying power, for one thing. Just this month, Manpower consolidated all its wide area networking services--which more than 25 companies had provided--with BT Global Services in a five-year, $73 million deal covering 3,200 offices in 63 countries. That will save about $10 million a year, Davidson says.
Davidson knows globalization tests IT employees' ability to keep up with change. Consolidating on WebSphere integration tools, for example, forced employees who had been using Microsoft's BizTalk to learn new skills. "Frankly, there were some upset people," he admits.
But the personal philosophy that drives Davidson to accept the humbling task of learning a new language reflects what he expects from Manpower's global IT organization. "Life is one long journey of learning," he says. "When you stop learning, you die."
A newly deployed customer-data system is showing Bank of New York that it's possible to transform a highly disorganized situation into a neatly packaged global view of its customers.
Bank of New York, having grown through more than 80 acquisitions worldwide in the past 10 years, kept information on thousands of institutional clients and more than 700,000 retail customers in a mishmash of proprietary applications running on local servers, databases used within specific business groups, and spreadsheets stored on desktop PCs. Servers containing customer data were scattered from New York to Milan to Mumbai, with access often limited to groups or countries.
In March, after three years of planning and development, Bank of New York completed the global rollout of a centralized customer-data environment. The system, which runs on Siebel Systems Inc.'s sales-force-automation software, gives 1,650 employees worldwide a consolidated view of each customer relationship. And executives are getting the consolidated customer reports they need to make effective decisions. "Not only can we better predict sales performance, but we can also track business at risk," Joyce says.
The system prevents salespeople and executives from appearing ill-informed when dealing with clients. In one instance prior to its deployment, bank staff told a New York executive, preparing to call on an Italian company, that the bank had no relationship with the company. In a meeting with the company's U.S. finance arm, the executive learned that Bank of New York, in fact, was already managing bonds for its Luxembourg division and pension assets for its U.K. division. With the new system, the executive would have been able to locate online records of those relationships, which came from bank acquisitions.
Gerald Wellesley, a managing director who heads the bank's European corporate-banking unit in London, says knowledge of existing relationships lets his five-person team offer complementary products and services. "It's very satisfying, speaking as someone with a lot of client contact, to feel that well informed," Wellesley says.
The system gives Bank of New York an edge on competitors. Many financial-services companies are working to centralize customer data, but few have achieved that goal, TowerGroup analyst Jerry Silva says. "It's usually difficult enough to bring together the customer information within an organization, much less across [international] borders," he says. That involves navigating each country's infrastructure limitations, language and cultural differences, privacy laws, and other legal considerations. Bank of New York mitigated some of those challenges by including European and Asian steering committees in the software selection, design, and rollout of the system.
Moreover, sales and product groups can be possessive of their client information. The bank motivates employees worldwide to update customer information by tying commissions and expense-account reimbursements to such efforts.
Another big challenge, VP of technology Dave Moran says, came from the complex task of gathering customer data from so many locations and then cleaning it up, by removing errors or duplications, so it could be included in the consolidated system.
But the ability to improve customer relationships on a global basis justifies those challenges. "We can't expect to manage those relationships effectively if we don't have good information," Wellesley says. "It's like operating with one hand tied behind your back."
Included in GrafTech International Ltd.'s portfolio of industrial products are graphite electrodes--devices used by steel companies to melt scrap metal that can withstand temperatures of up to 5,000 degrees Fahrenheit. Barges and tankers carrying raw materials for GrafTech's products travel from suppliers all over the world to plants in the United States, Mexico, Brazil, and throughout Europe. Graphite electrodes take two months to make, requiring the company to accurately estimate customer demand and the region of the world from which it will be coming.
GrafTech is creating a single global supply-chain-management and enterprise-resource-planning system using PeopleSoft Inc.'s EnterpriseOne software suite. The effort is part of a broad business-transformation strategy put in place three years ago to lower costs companywide. It includes closing inefficient plants and rerouting manufacturing to the best-performing ones, and making better-informed decisions about where to source materials. "We're a company that has a new vision for how we want to manage our business, and we want to really leverage our global size," says David Hilmer, GrafTech's director of IT.
But several years of a weak economy and a sluggish steel industry--GrafTech's largest customer base--led to uneven business results. Now, after two years of declining sales, GrafTech's annual revenue rose 20% to $713 million in 2003.
Implementing the new system, which is about halfway complete, requires ripping out disparate software at locations worldwide and replacing it with front-end software to access the centralized applications and data. It will provide plant managers, material buyers, planners, and salespeople with access to the same information about global operations. That means managers with overworked production lines at one plant can learn immediately if a plant hundreds of miles away has the capacity to pick up the extra work.
It's a touchy initiative, requiring change from people at factories with many distinct cultures and established ways of doing things. "There are country and company fiefdoms who have been operating the way they do for 75 or more years," Hilmer says. GrafTech put together an international team with representation from every plant and business line. They worked together for almost a year at a company office in Switzerland, planning and building a model for the new system.
The first PeopleSoft module that went live models GrafTech's global supply chain to provide better understanding of customers, suppliers, and plant capacity. Other modules manage demand forecasting, production, and distribution planning.
The new system requires GrafTech to clean and standardize all existing data before loading it into the PeopleSoft software. It's a big job, but it's worth it, Hilmer says. "If there's less time spent on disparity, there's more time to spend on analyzing information and making decisions."
As one of the world's largest providers of outsourced business-technology services, EDS has the daunting task of managing nearly 250,000 servers at thousands of customer locations around the globe. That's in addition to managing thousands of the company's own servers in various regional data centers, ranging from its headquarters in Dallas to sites in Germany and Australia.
The key to accomplishing that in an efficient manner is to automate many of the manual processes used by IT managers to set up and operate data-center resources. "If you can take automation into the act of provisioning those servers, upgrading them, and patching them, you can save a lot in terms of people cost," says Larry Lozon, VP of hosting services for EDS.
That management challenge becomes more difficult as companies expand globally, whether to enter new markets, take advantage of less-expensive workers, or get closer to the source of raw materials or components. For EDS, that means "the growth has been occurring on a global basis," Lozon says.
"Companies are no longer focusing on the physical location where processing may be occurring but are using a 'best shore' strategy where they put their resources in the right location, whether that's the Far East, U.S., Canada, or wherever," he says.
EDS began using Opsware's software two years ago in densely populated data-center environments, managing about 65,000 servers for hundreds of customers. The second phase, now under way, involves using recently introduced Opsware Satellite software to provide automated management to remote servers. That will let EDS better manage 160,000 more servers in hundreds of countries.
In one test, Lozon used Opsware to deploy a security patch to 250 servers in a single day; previously, the task would have taken a week, he says. Provisioning an operating system with a database and apps used to take eight hours; it now takes one. Deploying 60 servers with software was a four-week task; it now takes three days.
Remote facilities pose special challenges, says Raj Gossain, Opsware's senior director of product marketing. "Half of all servers are deployed in non-data-center remote facilities," he says. "A lot aren't managed at all. They become a security vulnerability, failure modes are fairly high, and they're likely to go down with nobody there to take care of the problem in a reasonable time frame."
As EDS deploys Opsware Satellite over the next few years, better remote maSnagement will give customers more options to place processing capabilities wherever the best business value can be determined, Lozon says.
Still, systems-management tools have a ways to go before they let businesses "transparently manage all of a company's enterprise, even appropriate links to external supplies and customers," says Gordon Haff, an analyst with research firm Illuminata. "We're still clearly removed from the rather grand ambition of a single data center."